What’s Inside the Welsh Government's £27.5 Billion Final Budget?

The Welsh government has announced a £27.5 billion budget that will see all departments receive increased funding from April 2024 to address inflation and pay rises, amidst a backdrop of political negotiations and economic pressures. This funding boost includes significant allocations for the NHS, local government, and various public services, reflecting a collaborative approach between Labour and Plaid Cymru to ensure stability ahead of the upcoming Senedd elections.

Last updated: 06 October 2023 (BST)

What’s happening now

The Welsh government has unveiled its final budget for the financial year 2024-2025, amounting to £27.5 billion. This budget is crucial as it is the last one before the Senedd elections scheduled for 7 May 2024. Key features of the budget include increased funding aimed at alleviating the pressures of inflation and supporting public sector wages. The announcement comes in light of an agreed deal worth nearly £300 million between Labour and Plaid Cymru, securing necessary funding for the NHS and local government, among other sectors.

Key takeaways

All government departments in Wales will receive increased funding from April 2024.
The budget totals £27.5 billion, with significant allocations for health and local government.
Funding includes £180 million for the NHS and £113 million for local councils.
This budget reflects a collaborative effort between Labour and Plaid Cymru.
Criticism has emerged from the Conservatives regarding the budget's priorities.

Timeline: how we got here

The journey to this budget has involved several significant milestones:

October 2023: Labour loses the Caerphilly by-election, highlighting the need for coalition support in the Senedd.
December 2023: Initial agreement reached between Labour and Plaid Cymru to secure funding for public services.
February 2024: Final budget announced, detailing allocations and adjustments in response to inflation and pay demands.

What’s new vs what’s known

New today/this week

The final budget announcement has introduced new financial allocations that were not included in the initial draft. Notably, there is a commitment to an additional £180 million for the NHS, bringing its total budget to £12.6 billion. Additionally, local councils will see a minimum increase of 4% in their budgets, totalling £113 million.

What was already established

Prior to this final announcement, it was already known that the Welsh government was facing considerable pressure due to inflation and the need for public sector wage increases. The Labour-Plaid Cymru deal had laid the groundwork for increased public spending, particularly in the NHS and local government, but details on specific allocations were still pending.

Impact for the UK

Consumers and households

The budget increases will likely have a direct impact on consumers, particularly in areas such as healthcare access and local services. With an increase in council budgets by 4.5%, local governments will have more resources to maintain and improve services that directly affect household welfare, such as waste collection and community services.

Businesses and jobs

For businesses, the additional funding for apprenticeships and further education could enhance workforce development. However, concerns have been raised regarding the budget's focus on bureaucracy and foreign aid, which some argue diverts funds from pressing local needs. The long-term sustainability of public services will be critical for job retention and growth in the region.

Policy and regulation

This budget is particularly significant as it reflects the Welsh Labour government's response to the evolving political landscape in Cardiff Bay, where it lacks an outright majority. The collaboration with Plaid Cymru is a strategic move to ensure that vital funding gets approved, signalling a shift in how policy decisions may be approached in the future, especially in light of potential changes in government after the May elections.

Numbers that matter

£27.5 billion: Total budget for 2024-2025.
£180 million: Additional funding for the NHS, bringing its budget to £12.6 billion.
4.5%: Increase in local government budgets, with a minimum rise of 4% for individual councils.
£120 million: Set aside for capital investment projects post-election.
£300 million: Total agreed funding increase as part of the Labour-Plaid Cymru deal.

Definitions and jargon buster

Senedd: The Welsh Parliament responsible for making laws and decisions in Wales.
NHS: National Health Service, the publicly funded healthcare system in the UK.
Plaid Cymru: A political party in Wales that advocates for Welsh nationalism and social democracy.

How to think about the next steps

Near term (0–4 weeks)

As the budget is implemented from April, council budgets will begin to reflect the new allocations. Local authorities will need to plan how to best utilise their increased funds to address immediate needs in their communities.

Medium term (1–6 months)

Following the Senedd elections in May 2024, the new government will need to assess the effectiveness of this budget, particularly regarding the impact on public services and the economy. Discussions around capital investment projects will also be critical.

Signals to watch

Public responses to the changes in council services and healthcare access.
Performance reports from local authorities on budget utilisation.
Political developments following the Senedd elections and any shifts in coalition dynamics.

Practical guidance

Do

Stay informed about local council decisions regarding budget allocations and services.
Engage with community forums to voice concerns or suggestions regarding public services.
Monitor NHS announcements for changes in service delivery or funding allocation.

Don’t

Ignore potential changes to local services that may arise from budget adjustments.
Assume that all funding will directly translate into improved services without monitoring outcomes.
Overlook the importance of advocating for specific community needs in the wake of budget changes.

Checklist

Verify your local council's budget increases and planned allocations.
Review NHS service updates to understand how funding changes may impact healthcare access.
Participate in local meetings regarding the budget to communicate your priorities.
Follow news on the outcomes of the Senedd elections and their implications for future budgets.
Assess how changes in funding might affect your business or employment opportunities.

Risks, caveats, and uncertainties

While the budget signals an increase in funding, there are concerns about its long-term sustainability, especially given the backdrop of economic challenges. Critics argue that the focus on bureaucracy and foreign aid could divert necessary resources from crucial public services. Additionally, without a proper strategy for capital investment and prevention, merely increasing budgets may not yield the desired improvements in service delivery. The upcoming elections may also shift priorities depending on the outcome.

Bottom line

The 2024 Welsh budget represents a critical moment for public services, balancing immediate financial pressures against long-term needs. As Wales gears up for elections, the collaboration between Labour and Plaid Cymru reflects an effort to ensure stability in funding, though the effectiveness of these measures will depend on how well they address the real needs of the populace. Observing the subsequent implementation and impact of this budget will be essential for understanding the future direction of Welsh public services.

FAQs

What is the total amount of the Welsh budget for 2024-2025?

The total amount of the Welsh budget for 2024-2025 is £27.5 billion, which includes increased funding for various public services.

How much additional funding is allocated to the NHS?

The NHS will receive an additional £180 million, bringing its total budget to £12.6 billion for the fiscal year.

What are the implications of the budget for local councils?

Local councils will benefit from an increase in their budgets by 4.5%, with no council receiving less than a 4% increase, which will help them maintain and improve local services.